Ramaco Resources, Inc.

Notes to Consolidated Financial Statements

NOTE 1—DESCRIPTION OF BUSINESS

Ramaco Resources, Inc. (“Ramaco”) is a Delaware corporation formed in October 2016. Our principal corporate offices are located in Lexington, Kentucky. We are an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern Virginia, and southwestern Pennsylvania.

As used herein, “the Company,” “we,” “us,” “our,” and similar terms include Ramaco Resources, Inc. and its subsidiaries, unless the context indicates otherwise.

Our development portfolio includes four primary properties: Elk Creek, Berwind, RAM Mine and Knox Creek. We believe each of these projects possesses geologic and logistical advantages that make our coal among the lowest delivered-cost U.S. metallurgical coal to a majority of our domestic target customer base, North American blast furnace steel mills and coke plants, as well as international metallurgical coal consumers.

We operate three deep mines and a surface mine at our Elk Creek mining complex. Development of this complex commenced in 2016 and included construction of a preparation plant and rail load-out facilities. Development of our Berwind mining complex began in late 2017. In 2020, we suspended development at the Berwind mining complex due to lower pricing and demand largely caused by the economic impacts of the COVID-19 pandemic. This complex remains a key part of our anticipated future growth. We expect to achieve commercial production at the Berwind mining complex approximately six months after we resume the slope project. The Knox Creek preparation plant processes coal from our Berwind mine as well as coal we may purchase from or toll wash for third parties. Our RAM Mine property is scheduled for initial production in 2022, subject to permitting and market conditions.

Impact of COVID-19 Pandemic on Our Business— The global spread of COVID-19 has created significant market volatility and economic uncertainty and disruption since early 2020. In response to the pandemic, governments worldwide have placed significant restrictions on both domestic and international travel and have taken action to restrict the movement of people and suspend some business operations, ranging from targeted restrictions to full national lockdowns. These lockdowns, restrictions on public gatherings and stay-at-home measures, coupled with the spread and impact of the COVID-19 pandemic, have resulted in a significant worldwide economic slowdown. In certain cases, states that had begun taking steps to reopen their economies experienced a subsequent surge in cases of COVID-19, causing these states to cease such reopening measures in some cases and reinstitute restrictions in others. The COVID-19 pandemic may significantly worsen in the United States during the upcoming months, which may cause federal, state and local governments to reconsider imposing more severe restrictions on business and social activities. In the event governments impose such restrictions, the re-opening of the economy may be further delayed.

The Company has been adversely affected by the deterioration and increased uncertainty in the macroeconomic environment as a result of the impact of COVID-19. In 2020, two customers notified us that their contractual obligations to purchase metallurgical coal from us would be delayed or curtailed because of COVID-19. These delays or curtailments reduced our total contracted sales volumes for 2020 by approximately 10% or almost 200,000 tons.

We took other actions to limit our production and reduce capital expenditures in response to the pandemic and reduced global demand for metallurgical coal. These included:

an operational furlough of approximately 182 employees at the Elk Creek mining complex in West Virginia for most of the month of April 2020;

a one-week operational furlough of approximately 157 employees at the Elk Creek mining complex in July 2020;

the partial closure of our Berwind low volatile development mine complex affecting approximately 44 employees effective in July 2020; and

a reduction or deferral of non-essential capital expenditures including cessation of the slope project at the Berwind mining complex to adapt to the current market conditions.

To date we have not had significant issues with any of our critical suppliers, but we continue to communicate with them and closely monitor their developments to ensure we have access to the goods and services required to maintain our operations.

We continue to actively monitor the situation and may take further actions altering our business operations if we determine they are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. Additional measures we may take could include extensions of operational furloughs, temporary salary reductions for certain executives, staffing reductions and idling or realignment of additional mines as conditions dictate. It is not clear what potential effects any such alterations or modifications may have on our business. The impact on our results in future periods could be much more significant and cannot currently be determined and quantified.